2016 (1) TMI 32 - AT - Income Tax

Reopening of assessment - non-issuance of notice u/s 143(2) - Held that - In the present case, it is an admitted fact that the AO did not issue any notice u/s 143(2) of the Act. A similar issue has been decided by the Hon ble Jurisdictional High Court of Allahabad in the case of CIT Vs Rajeev Sharma reported at (2010 (5) TMI 600 - ALLAHABAD HIGH COURT) wherein by following judgment of of ACIT Vs Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA) it has been held that the assessment could not be sustained for lack of service of statutory notice u/s 143(2) of the Act. - Decided in favour of assessee.

Summary

Issues:
Non-issuance of notice u/s 143(2) of the IT Act, 1961 in the assessment proceedings.

Analysis:

1. The appeal was filed by the assessee against the order of the ld. CIT(A), Muzaffarnagar, challenging the dismissal of the ground on non-issuance of notice u/s 143(2) of the IT Act, 1961. The assessee contended that the absence of such notice rendered the assessment proceedings void ab initio. The AO had reopened the case under section 148 of the Act, alleging an escaped amount received by the assessee. The AO framed the assessment without issuing a notice u/s 143(2), leading to the dispute.

2. The assessee's grounds raised concerns about the legality of the assessment proceedings due to the absence of the statutory notice u/s 143(2). The ld. CIT(A) dismissed the grounds, stating they were not raised before the AO and were a fresh controversy. The assessee argued that the notice u/s 143(2) is mandatory and not curable under section 292B of the Act. The dispute centered on the jurisdictional requirement of serving the notice for a valid assessment.

3. The AO's remand report clarified the sequence of events, indicating that no return was filed within the stipulated time after the notice u/s 148, justifying the non-issuance of notice u/s 143(2). The assessee contended that compliance was accepted by the AO, and reasons were supplied, making the absence of notice u/s 143(2) a critical flaw in the proceedings. The ld. CIT(A) dismissed the issue without addressing the core contention of the assessee regarding the legality of the assessment.

4. The ITAT, Delhi, considered the legal requirement of issuing notice u/s 143(2) as essential for a valid assessment, citing relevant case laws. Relying on the decision of the Hon'ble Jurisdictional High Court of Allahabad in a similar case, the ITAT held that the assessment without serving the statutory notice u/s 143(2) was void ab initio. The judgment emphasized the mandatory nature of the notice, essential for establishing jurisdiction and upholding the validity of the assessment process.

5. Consequently, the ITAT allowed the appeal of the assessee, setting aside the impugned order and declaring the reassessment framed without serving the statutory notice u/s 143(2) as legally flawed and void ab initio. The judgment highlighted the significance of procedural requirements in assessment proceedings, affirming the necessity of complying with statutory provisions to maintain the integrity of the assessment process.